The Apex Mid Cap Growth Fund
C/o Bhirud Funds Inc.
Soundview Plaza, 1266 East Main Street
Stamford, CT 06902
Telephone (800) 446-2987
SEMI ANNUAL REPORT
JANUARY 31, 1999
March 22, 1999
Enclosed is the Semi-Annual Report of the Apex Mid Cap Growth
Fund for the six months ending January 31, 1999.
The fund had a flying start in 1999, up 22% for the month of
January 1999 compared with a 4% return for the S&P 500 index.
The attached portfolio largely speaks for itself. We continue to
focus on unique growth ideas, potential takeovers and special
situations. We believe that with the DJIA at close to the
10,000 level the overall market is not cheap and the big returns
going forward are going to come from creative stock selection.
Our focus continues to be on achieving superior returns as well
as protecting capital in the event a market correction. We will
attempt to raise cash and pursue defensive strategies in
uncertain markets. We did this, for example, in the crisis of
October 1998.
I want to thank you for your continued support of the Fund and
suggest that existing shareholders consider adding to their
positions. Please call us for a prospectus and application form.
Suresh L. Bhirud
Chairman of the Board
PAGE: 1
<TABLE>
THE APEX MID CAP GROWTH FUND
SCHEDULE OF INVESTMENTS REPORT DATE 31-Jan-99
<CAPTION>
CO. NAME Shares % MV Market Value
<S> <C> <C> <C>
ICN Pharmaceuticals 750 18094
Noven Pharmaceuticals * 2000 13000
TOTAL DRUG INDUSTRY 1.58 31094
Sequent Computer Systems * 1000 12375
TOTAL COMPUTER & PERIP. 0.63 12375
Digital River Inc. * 1700 96475
Acclaim Entertainment * 4000 37000
TOTAL COMPUTER SOFTW & SVC 6.76 133475
Broadcom * 200 26625
TOTAL SEMICONDUCTOR 1.35 26625
ValueVision International A * 10000 92500
Nextel Communications * 3400 108800
TOTAL TELECOM. SERVICES 10.20 201300
CIENA Corp. * 4000 80752
TOTAL TELECOM. EQUIPMENT 4.09 80752
CDnow * 3000 69750
Sharper Image * 3000 42939
TOTAL RETAIL SPECIALTY 5.71 112689
Data Broadcasting * 4000 80000
TOTAL FINANCIAL SERVICES COMP. 4.05 80000
National Discount Brokers Group 4000 76000
TOTAL SECURITIES BROKERAGE COMP. 3.85 76000
NetGravity * 3200 72400
TOTAL ADVERTISING 3.67 72400
America Online * 600 105525
Cyberian Outpost Inc. * 2000 50500
TOTAL INTERNET INDUSTRY 7.91 156025
N2K Inc. * 2000 32250
Preview Travel Inc. * 3000 79689
Applix * 3000 16125
theglobe.com * 1900 125520
EarthWeb * 1800 87975
TOTAL MISCELLANEOUS 17.31 341559
TOTAL ASSETS COMMON STOCKS 67.10 1324288
eBay * -200 -55525
Avnet -1000 -44938
TOTAL ELECTRONICS -5.09 -100463
TOTAL ASSETS SHORT STOCKS -5.09 -100463
STAR BANK REPO'S 60.49 1194000
TOTAL COMMON STOCKS 122.50 2417825
TOTAL INVESTMENTS 122.50 2417825
OTHER ASSETS (LESS LIABILITIES) -22.50 -444086
NET ASSETS 100.00 1973739
NET ASSETS VALUE PER SHARE 8.11
OFFERING PRICE PER SHARE 8.60
<FN>
* Non - income producing securities
</FN>
</TABLE>
PAGE: 2
THE APEX MID CAP GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES January 31, 1999 (UNAUDITED)
ASSETS
Investment Securities at Value $2,417,825
(Identified cost - $2,596,383) (Note 1)
Cash 921
Interest receivable 116
Dividends receivable 45
Receivable Investment Securities Sold 131,839
Due from broker - Short sales 384,780
Prepaid Insurance 303
Total Assets $2,935,829
LIABILITIES
Payables:
Investment Securities Purchases $ 937,465
Accrued expenses 24,625
Total Liabilities ($962,090)
NET ASSETS (Equivalent to $8.11 per share based on 243,347
shares outstanding) $ 1,973,739
COMPOSITION OF NET ASSETS:
Paid in Capital $ 2,814,082
Distribution in excess of accumulated Net Realized
gain(loss) (661,785)
Accumulated Net Investment Income (Loss) --
Net Unrealized Appreciation (Depreciation) of Investments (178,558)
Total Net Assets $1,973,739
STATEMENT OF OPERATIONS (UNAUDITED) FOR THE SIX MONTHS ENDED JANUARY 31, 1999
INVESTMENT INCOME
Dividends $ 185
Interest 27,210
EXPENSES
Audit $ 1,995
Fund Accounting 5,735
Transfer Agent (Note 6) 2,550
Legal 1,084
Miscellaneous 27
Shareholder Report 116
Directors 4,031
Registration 378
Organization (Note 5) 0
Insurance 639
Fund Administration (Note 4) 1,675
Custodian 3,257
Investment Advisor (Note 4) 8,376
Dividends on Short Sales 132
12b-1 Fees 2,116
Total Expenses ( 32,111)
Expense Reimbursement/ waived by Advisor (Note 4) 10,051
Expense net of Reimbursement/ waiver (22,060)
NET INVESTMENT GAIN (LOSS) $ 5,335
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net Realized Gain (Loss) on Investments $ (199,579)
Change in Unrealized Appreciation (Depreciation) of
Investments 424,219
NET REALIZED/UNREALIZED GAIN (LOSS) ON INVESTMENTS $224,640
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $229,975
See accompanying Notes to Financial Statements PAGE: 3
<TABLE>
THE APEX MID CAP GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS JANUARY 31,1999 (UNAUDITED)
<CAPTION>
For the For the
Six Months Year Ended
Ended
January 31, July 31, 1998
1999
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Net Investment Income/ (loss) $ 5,335 $ (43,654)
Net Realized Gain / (loss) on investment
Securities Sold (199,579) 472,323
Net unrealized appreciation/(depreciation)
of Investments 424,219 (280,018)
Net Increase (Decrease) in Net Assets
Resulting from Operations $ 229,975 $ 148,651
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Dividend distributions paid (48,682) 75,923
Capital Gains (44,136) 0
Total Distributions (92,818) 75,923
CAPITAL SHARE TRANSACTIONS
Shares Sold 164,800 214,637
Shares issued in lieu of Cash Distributions 92,489 (75,923)
Cost of shares Redeemed (123,700) (353,118)
Increase (Decrease) in Net Assets Due to
Capital Share Transactions (133,589) (214,404)
TOTAL INCREASE (DECREASE) IN NET ASSETS 270,746 10,170
NET ASSETS BEGINNING OF PERIOD 1,702,993 1,692,823
NET ASSETS END OF PERIOD $ 1,973,739 $ 1,702,993
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
(UNAUDITED)
<CAPTION>
For the Six For the For the
Months Ended Year Ended Year Ended
January 31, July 31, July 31,
1999 1998 1997
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $7.53 $6.93 $7.18
Income/(Loss) from Investment Operations:
Net Investment Income/(Loss) 0.02 (0.36) (0.33)
Net Gain/(Loss) on Securities
(Both Realized and Unrealized) 0.98 1.58 0.44
Total from Investment Operations 1.00 1.22 0.11
Distributions:
Dividend Distributions Paid (0.22) (0.62) (0.36)
Distributions from Capital Gains (0.20) 0 0.00
Total Distributions (0.42) (0.62) (0.36)
NET ASSET VALUE, END OF PERIOD $ 8.11 $ 7.53 $ 6.93
Total Return (Not Reflecting Sales Load) 14.55%** 8.66% (3.48)%
Ratios/Supplemental Data:
Net Assets, End of Period (in thousands)$1,974 $1,703 $1,693
Ratios to Average Net Assets:
Expenses 1.87%** 5.26% 5.25%
Net Investment Income/(Loss) 0.31%** (2.54)% (4.73)%
Effect of Reimbursements/Waivers on
Above Ratios 0.59%** 1.19% 1.21%
Portfolio Turnover Rate 206.65%** 205.06% 275.55%
<FN>
* Based on weighted average shares outstanding
** Not annualized
</FN>
</TABLE>
See accompanying Notes to Financial Statements PAGE: 4
1. SIGNIFICANT ACCOUNTING POLICIES
Bhirud Funds, Inc. (the "Fund") is a diversified open-end
management investment company currently consisting of The Apex
Mid Cap Growth Fund portfolio (the "Portfolio"). The Fund was
incorporated in Maryland on May 27, 1992. Prior to November 4,
1992 (commencement of operations), the Fund had no operations
other than the sale of 10,000 shares of stock on August 4, 1992
at a cost of $100,000 to Thomas James MidCap Partners
representing the initial capital. The following is a summary of
significant accounting policies followed by the Fund:
SECURITY VALUATION
Readily marketable portfolio securities listed on the New York
Stock Exchange are valued at the last sale price reflected at
the close of the regular trading session of the New York Stock
Exchange on the business day as of which such value is being
determined. If there has been no sale on such day, the
securities are valued at the mean of the closing bid and asked
prices on such day. If no bid or asked prices are quoted on
such day, then the security is valued by such method as the
Board of Directors shall determine in good faith to reflect its
fair value. Readily marketable securities not listed on the New
York Stock Exchange but listed on other national securities
exchanges or admitted to trading on the National Association of
Securities Dealers Automated Quotations, Inc. ("NASDAQ")
National List are valued in like manner. Portfolio securities
traded on more than one national securities exchange are valued
at the last price on the business day as of which such value is
being determined as reflected on the tape at the close of the
exchange representing the principal market for such securities.
Readily marketable securities traded in the over-the-counter
market, including listed securities whose primary market is
believed by the Advisor to be over-the-counter but excluding
securities admitted to trading on the NASDAQ National List, are
valued at the mean of the current bid and asked prices as
reported by NASDAQ or, in the case of securities not quoted by
NASDAQ, the National Quotation Bureau or such other comparable
sources as the Board of Directors deem appropriate to reflect
their fair value.
United States Government obligations and other debt instruments
having sixty days or less remaining until maturity are stated at
amortized cost. Debt instruments having a greater remaining
maturity will be valued at the highest bid price obtained from a
dealer maintaining an active market in that security or on the
basis of prices obtained from a pricing service approved as
reliable by the Board of Directors.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are accounted for on the dates the
securities are purchased or sold (the trade dates), with
realized gain and loss on investments determined by using
specific identification as the cost method. Interest income
(including amortization of premium and discount, when
appropriate) is recorded as earned. Dividend income and
dividends and capital gain distributions to shareholders are
recorded on the ex-dividend date.
FEDERAL INCOME TAXES
The Fund intends to qualify as a "regulated investment company"
under Subchapter M of the Internal Revenue Code and distribute
all of its taxable income to its shareholders. Therefore, no
federal income tax provision is required.
PAGE:5
2. CAPITAL STOCK TRANSACTIONS
The Articles of Incorporation, dated May 27, 1992, permit the
Fund to issue twenty billion shares (par value $0.001).
Transactions in shares of common stock for the six months ended
January 31, 1999 were as follows:
Shares Amount
Beginning Balance 226,196 $ 2,724,147
Shares Sold 21,411 164,800
Shares Issued in Reinvestment of
Dividends 14,871 92,489
Shares Redeemed ( 19,131) ( 123,700)
Net Increase (Decrease) 17,151 133,589
Ending Balance 243,347 $2,857,736
3. INVESTMENTS
Purchases and sales of securities for the six months ended
January 31st, 1999other than short-term securities, aggregated
$3,006,930 and $4,285,259, respectively. There were short sale
transactions for the six months ended January 31, 1999 which
aggregate $1,278,329 of purchases and $974,363 of sales. The
cost of securities is substantially the same for Federal income
tax purposes.
For Federal income tax purposes:
Aggregate Cost $2,596,383
Gross Unrealized Appreciation 92,332
Gross Unrealized Depreciation (270,890)
Net Unrealized Depreciation ($178,558)
Short-Selling. The Fund is engaged in short selling which
obligates the Fund to replace the security borrowed by
purchasing the security at current market value. The Fund would
incur a loss if the price of the security increases between the
date of the short sale and the date on which the Fund replaces
the borrowed security. The Fund would realize a gain if the
price of the security declines between those dates. Until the
Fund replaces the borrowed security, the Fund will deposit
collateral with the broker-dealer, usually cash, U.S. government
securities, or other highly liquid securities, sufficient to
cover its short position. Securities sold short at January 31st,
1999and their related market values and proceeds are set forth
in the Schedule of Securities Sold Short.
4. INVESTMENT ADVISORY CONTRACT
The Fund employs Bhirud Associates, Incorporated (the "Advisor")
to provide a continuous investment program for the Fund's
portfolio, provide all facilities and personnel, including
Officers required for its administrative management, and to pay
the compensation of all Officers and Directors of the Fund who
are affiliated with the Advisor. As compensation for the
services rendered and related expenses borne by the Advisor, the
Fund pays the Advisor a fee, computed and accrued daily and
payable monthly, equal to 1.00% of the first $250 million of the
average net assets of the Portfolio; 0.75% of the average net
assets of the Portfolio between $250 and $500 million; and 0.65%
of the average net assets of the Portfolio over $500 million.
The Advisor has voluntarily agreed to reimburse the Fund in the
event the Fund's expenses exceed certain prescribed limits.
During the six months ended January 31, 1999 the Advisor elected
to defer the payment of Advisor fees payable in amount of $
8,376. The Advisor has voluntarily agreed to waive these fees,
considering the small assets of the Fund. The Advisory and
Administrative Services Contracts provide that if, in any fiscal
year, the aggregate expenses of a Fund, excluding interest,
taxes, brokerage and extraordinary expenses, but including the
Advisory and Administrative Services fees, exceed the expense
limitation of any state in which the Trust is registered for
sale, the Funds may deduct from fees paid to the Advisor and
Administrator their proportionate share of such excess expenses
to the extent of the fees payable. Currently, the most
restrictive state limitation is 2.5% of the first $30 million,
2% of the next $70 million and 1.5% of the excess over $100
million of the average value of the Fund's net assets.
PAGE:6
The Fund retained Bhirud Associates, Inc. ("BAI") to act as
Administrator for the Fund from November 1, 1994. BAI provided
administrative services for the Fund. During the six months
ended January 31, 1999 the Administrator elected to defer the
payment of Administrative service fees payable in amount of
$1,675.
From December 1, 1996, the Star Bank, N.A. has been providing
custodian services and fund accounting, and transfer agency
functions are provided by American Data Services for the Fund
until January 31st, 1998. From February 1st, 1998, the Mutual
Shareholders Services, Inc. has been providing fund accounting,
and transfer agency functions.
5. ORGANIZATION EXPENSES
The organizational expense was amortized over the first five
years of the Fund's operations and is now zero going forward.
6. DISTRIBUTION PLAN
The Fund's Board of Directors has adopted a distribution plan
(the "Plan") under Section 12(b) of the Investment Company Act
of 1940 and Rule 12b-1 thereunder. The Plan provides that the
Portfolio may bear certain expenses and costs which in the
aggregate are subject to a maximum of 0.25% per annum of the
Portfolio's average daily net assets. For the six months ended
January 31st, 1999, the Fund has incurred distribution costs of
$2,057 payable to payable to Bhirud Associates, Inc.
7. TRANSACTIONS WITH AFFILIATES
During the six months ended January 31st, 1999 the Fund paid $
9,627 brokerage commissions to Bhirud Associates, Inc.
8. RECLASSIFICATION OF CAPITAL ACCOUNTS
In accordance with generally accepted accounting principals, the
Fund recorded reclassifications in the capital accounts. The
Fund recorded a permanent book/tax difference of $(43,654) as of
July 31, 1998, from undistributed net investment income to paid
in capital. These reclassifications have no impact on net asset
value of the Fund and are designed generally to present
undistributed income and realized gains on a tax basis which is
considered to be more informative to the shareholder.
PAGE:7
THE APEX MID CAP GROWTH FUND
c/o Bhirud Funds Inc.
SOUNDVIEW PLAZA
1266 EAST MAIN STREET
STAMFORD, CT 06902
(800) 446 2987
BOARD OF DIRECTORS
Suresh L. Bhirud* Chairman of the Board;President of
Bhirud Associates, Inc.
Alexander N. Crowder, III Management Consultant
Harish L. Bhirud* Bhirud Funds Inc.
M. John Sterba, Jr. Chairman of Investment
Management Advisors, Inc.
Tim Fenton Partner, Fenton & Zelenetz, Inc.
* "Interested person" as defined in the Investment Company Act of 1940.
OFFICERS
Suresh L. Bhirud* Chairman of the Board & Treasurer
Harish L. Bhirud* Vice-President
Investment Advisor & Distributor Bhirud Associates, Inc.
Administrator Bhirud Associates, Inc.
Custodian Star Bank, N.A.
Legal Counsel Battle Fowler
Independent Auditors Van Buren & Hauke, LLC
PAGE:8
